One of the reasons that many Americans get up and go to work every day is to put some money away for retirement. While Social Security payments can be a helpful financial foundation in retirement, it is often not enough to cover anything but the most basic expenditures, especially in the uncertain financial times wrought by the coronavirus pandemic.
Based on average annual spending for American seniors and the national average life expectancy at age 65 of 19.4 years, the average American will spend about $987,000 from retirement age on. And those hoping for a more comfortable and financially secure retirement should plan on saving a little more.
Of course, both cost of living and life expectancy vary considerably by state — and so, too, does the cost of retirement. Using the average annual spending of Americans 65 and older — adjusted at the state level for cost of living and life expectancy — 24/7 Wall St. calculated what it will cost to retire comfortably in each state. All data used in the ranking came from the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the Institute for Health Metrics and Evaluation, an independent global health research center at the University of Washington.
One of the best ways to prepare financially is through retirement-specific accounts, such as IRAs or 401(k)s. These types of funds offer special tax benefits and often come with employer matches. Those who fail to save enough and take advantage of options like these — or draw from them before they hit retirement age — may have to work past age 65 in order to pay the bills. Here is what you can do if COVID-19 is threatening your retirement.
Just how much one needs to save to comfortably meet expected spending from age 65 on depends on a number of factors. Many who work in the public sector, for example, may benefit in retirement from regular pension payments, in addition to Social Security. The amount of these pension payments vary by state and employer. Even in some of the most expensive places to retire, state subsidies can help finance the cost of retirement. These are the states spending the most to fund their residents’ retirement.